Decentralized finance (DeFi) lending protocol Warp Finance has experienced a flash loan attack that resulted in a loss of $7.7 million worth of stablecoins.
Warp said the attack essentially allowed one user to borrow more funds than their collateral value, resulting in a loss for other users or lenders. Flash loans allow users to borrow funds without collateralization, provided the funds are repaid within a single blockchain transaction.
Warp did not immediately explain how the attack occurred or which stablecoins were lost, but Nick Chong of Hex Capital posted the flash loan transaction that shows the loss of DAI and USDC stablecoins.
Specifically, 3.85 million DAI and 3.92 million USDC in the Warp contracts, totaling the loss at $7.7 million (1 stablecoin is worth $1).
Warp said it plans to recover approximately $5.5 million that is "still secured in the collateral vault." Upon successful recovery, the protocol wants to distribute the funds to users who suffered a loss.
Warp is expected to post a detailed analysis of the attack and next steps "in the coming days."